Robinhood’s latest hot product is far removed from its Wild West ways

Robinhood turned heads this week when it said one of its most popular offerings is now a plain-vanilla cash-sweep service that puts deposits into bank accounts insured by the Federal Deposit Insurance Corp.

The service, available to gold members who pay $5 per month, debuted last September and currently pays 4.65% on deposits.

Don't worry. There's still plenty of opportunities for financial thrill seekers among Robinhood's customer base. CEO Vlad Tenev told investors on the company's earnings call Wednesday that the brokerage plans to debut futures trading around the end of the year, pending regulatory approval.

Robinhood also announced this week the ability to trade about 40 stocks and ETFs overnight five days a week. After-hours trading often involves thinner trading and greater volatility. Apple, Amazon and Tesla are among the stocks that Robinhood customers can trade overnight, but over time the company plans to add more stocks to that list. Overnight trading, which starts to roll out next week, will allow customers to trade from 5 p.m. Pacific time Sunday to 5 p.m. Pacific time Friday.

For customers of the cash sweep, Robinhood's deposits are swept into a collection of banks so that they are FDIC-insured for up to $1.5 million, moving up to $2 million on June 1. Banks participating in Robinhood's cash sweep program include Wells Fargo, U.S. Bank, Citibank and Goldman Sachs, with Truist Bank joining next week, according to Robinhood's mobile app Thursday.

Robinhood saw net deposits climb $1.5 billion in March and $4.4 billion for the entire first quarter, which was a tumultuous period, given the March 10 collapse of Silicon Valley Bank. Robinhood received another $1.4 billion in net deposits in April, a month that often sees customers pulling cash out to pay taxes.

The first-quarter growth in net deposits reflects a 29% annualized growth rate. Gold cash sweep balances were up 67% from the previous quarter, reaching $8 billion.

Robinhood's first-quarter results, released Wednesday, showed a $511 million net loss, or 57 cents per share, compared to a net loss of $392 million, or 45 cents per share, in last year's first quarter. This year's first quarter included a $485 million one-time expense tied to canceling stock options for the company co-founders in 2021. That move helped cut quarterly operating costs by up to $50 million, starting in the current quarter, and reduced diluted share count by 35.5 million shares in February 2023.

Revenue in the first quarter reached $441 million, up from $299 million in revenue in the same quarter a year ago.

Robinhood shares rose 58 cents, or about 6%, to close at $9.65 Thursday.

It caps a challenging year for the financial services upstart, one which saw the layoff of more than 1,000 employees last year as Robinhood struggled to adapt to the chillier investment and interest-rate climate. Still, its leadership took a victory lap on the earnings call.

"Since we launched over eight years ago, Robinhood has introduced several innovations that have become industry standard today," Tenev said, pointing to zero-commission stock trading, mobile trading, easy digital onboarding, no account minimums and fractional shares. "With these innovations, we’ve disrupted the U.S. brokerage market and grown our business."

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